Question 5
Vietnam Pty Ltd purchased a truck for cash for $52,000 plus 10% GST on January 1, 2010. At the time of purchase it was estimated that the useful life of the vehicle would be 100,000 kilometres and it was expected that it would travel that distance over four years. At the end of four years of useful life it was calculated that the truck could be sold for $12,000. The accounting period for Vietnam Pty Ltd is the financial year.
The actual distance covered by the truck was as follows:
Year ending 30 June:
2010 10,000 kilometres
2011 25,000 kilometres
2012 30,000 kilometres
2013 22,000 kilometres
2014 8,000 kilometres
Required:
A) Calculate depreciation for the years ending 30th June 2010 to 30 June 2014 using the units of production method.
B) Prepare general journal entries to record the purchase of the truck and depreciation, using the straight-line method, for the period 1 January 2010 to 30 June 2012.
C) Prepare an extract from the balance sheet for the vehicle as at 30 June 2012 using the straight-line method of depreciation.
All calculations must be shown. Solutions provided without calculations will not receive marks.